Indian Agriculture Before and After Economic Reforms Essay Sample free essay sample

Navjit Singh Assistant Professor. Deptt. Of Management. Khalsa College Lyallpur. Jalandhar-14401. Punjab. India Contact: +9198555-29321 Abstract Agriculture one time known as the anchor of Indian Economy is at present at its worst. thanks to the anti husbandman. pro-Industry policy of the assorted Indian Governments since 1991. India is one time considered as the â€Å"Ann Data† of the full universe is fighting even to pull off the ain demand-supply job of assorted agricultural trade goods. The husbandmans are perpetrating self-destructions. are observing â€Å"Crop Holidays† and are contending with Govt. for illegal acquisition of land for developing Real estate or other commercially feasible undertakings at the cost of Agriculture. The purpose of this paper is to convey out the present scenario in the field of agribusiness that leads to the minimal part of Agriculture in the Indian GDP. one time the chief subscriber. This paper will discourse the assorted issues like less proficient support to husbandmans. hapless quality seeds. inappropriate storage. Minimal Support Price. irrigation. the job of recognition handiness and above all the impact of Liberalization. Globalization and Privatization on the Indian Agriculture Sector. The issues related to the WTO and their impact on Indian Agriculture and the effects of assorted pacts of WTO on Indian Agriculture sector will be discussed. Cardinal Wordss: Indian Agriculture. Economic Reforms. WTO. Gross Capital Formation 1. 0 Introduction Agriculturists in general and the little and fringy husbandmans in peculiar have been the worst sick persons from the onslaught of globalisation. With more than 40 per centum of agricultural loaning even today coming organize the non-institutional beginnings bear downing anyplace between 30-40 per centum involvement per annum. the husbandmans are in an immiserizing state of affairs. They are perpetrating one of the worst human calamities – self-destructions. Rural India without them decidedly is non reflecting. And with the woebegone deficiency of substructure there is a somberness non a bloom in the countryside. A diminution in the portion of agribusiness in the national income signifier over 50 per cent during the 50s t o less than 20 per cent today may be a mark of structural transmutation but the inquiry today is whether Indian agribusiness will be able to run into the new demands placed upon it by Liberalization. Denationalization and Globalization ( LPG ) . 1. 1 Reforms in Agriculture A common unfavorable judgment of India’s economic reforms is that they have been overly focused on industrial and trade policy. pretermiting agribusiness which provides the support of 60 per centum of the population. Critics point to the slowing in agricultural growing in the 2nd half of the 1990s ( shown in Table 1 ) as cogent evidence of this disregard. However. the impression that trade policy alterations have non helped agribusiness is clearly a misconception. The decrease of protection to industry. and the attach toing depreciation in the exchange rate. has tilted comparative monetary values in favour of agribusiness and helped agricultural exports. The portion of India’s agricultural exports in universe exports of the same trade goods increased from 1. 1 per centum in 1990 to 1. 9 per centum in 1999. whereas it had declined in the 10 old ages before the reforms. But while agribusiness has benefited from trade policy alterations. it has suffered in other respects. most notably from the diminution in public investing in countries critical for agricultural growing. such as irrigation and drainage. dirt preservation and H2O direction systems. and rural roads. As pointed out by Gulati and Bathla ( 2001 ) . this diminution began much before the reforms. and was really sharper in the 1980s than in the ninetiess. They besides point out that while public investing declined. this was more than offset by a rise in private investing in agribusiness which accelerated after the reforms. However. there is no uncertainty that investing in agriculture-related substructure is critical for accomplishing higher productiveness and this investing is merely likely to come from the populace sector. Indeed. the lifting tendency in private investing could easy be dampened if public investing in these critical countries is non increased. The chief ground why public investing in rural substructure has declined is the impairment in the financial place of the province authoritiess and the inclination for politically popular but inefficient and even sinful subsidies to herd out more productive investing. For illustration. the direct benefit of subsidising fertiliser and under pricing H2O and power goes chiefly to fertilizer manufacturers and high income husbandmans while holding negative effects on the environment and production. and even on income of little husbandmans. A phased addition in fertiliser monetary values and infliction of economically rational user charges for irrigati on and electricity could raise resources to finance investing in rural substructure. profiting both growing and equity. Competitive populism makes it politically hard to reconstitute subsidies in this manner. but there is besides no alternate solution in sight. Some of the policies which were important in advancing nutrient grain production in earlier old ages. when this was the premier aim. are now impeding agricultural variegation. Government monetary value support degrees for nutrient grains such as wheat are supposed to be set on the footing of the recommendations of the Commission on Agricultural Costs and Prices. a proficient organic structure which is expected to graduate monetary value support to sensible degrees. In recent old ages. support monetary values have been fixed at much higher degrees. promoting overrun. Indeed. public nutrient grain stocks reached 58 million dozenss on January 1. 2002. against a norm of around 17 million dozenss! The support monetary value system clearly needs to be better aligned to market demand if husbandmans are to be encouraged to switch from nutrient grain production towards other merchandises. Agricultural variegation besides calls for extremist alterations in some out-of-date Torahs. The Essential Commodities Act. which empowers province authoritiess to enforce limitations on motion of agricultural merchandises across province and sometimes even territory boundaries an d to restrict the maximal stocks jobbers and retail merchants can transport for certain trade goods. was designed to forestall exploitative bargainers from deviating local supplies to other countries of scarceness or from stashing supplies to raise monetary values. Its effect is that husbandmans and consumers are denied the benefit of an incorporate national market. It besides prevents the development of modern trading companies. which have a cardinal function to play in the following phase of agricultural variegation. The authorities has recognized the demand for alteration and late removed certain merchandises — including wheat. rice. coarse grains. comestible oil. oil-rich seeds and sugar — from the horizon of the act. However. this measure may non do. since province authoritiess may be able to take similar action. What is needed is a abrogation of the bing act and cardinal statute law that would do it illegal for authorities governments at any degree to curtail motion or stocking of agricultural merchandises ( Planing Commission. 2001 ) . The study of the Task Force on Employment has made comprehensive proposals for reappraisal of several other outdated agricultural Torahs ( Planing Commission. 2001 ) . For illustration. Torahs designed to protect land renters. doubtless an of import aim. stop up detering fringy husbandmans fro m renting out nonviable retentions to larger husbandmans for fright of being unable to repossess the land from the renter. The Agricultural Produce Marketing Acts in assorted provinces compel bargainers to purchase agricultural green goods merely in regulated markets. doing it hard for commercial bargainers to come in into contractual relationships with husbandmans. Development of a modern nutrient processing sector. which is indispensable to the following phase of agricultural development. is besides hampered by out-of-date and frequently contradictory Torahs and ordinances. These and other outdated Torahs need to be changed if the logic of liberalisation is to be extended to agriculture. 1. 2 Some of the indexs of the crisis: 1. 2. 1 Based on the Structural Adjustment Programme the authorities has been cut downing its investing in agribusiness. 1. 2. 2 The cardinal difference between agribusiness and industry is being ignored. . viz. whereas capital is elastic in supply. land is inelastic. There is no flat playing field. While the fabrication and service sectors are virtually pampered. the real/ rural sector that feeds the multitudes is practically disregarded. Even 1000s of farmers’ self-destructions could non bring such a comforting concern to the agribusiness sector in our agricultural economic system! 1. 2. 3 Farmer’s self-destructions – an all-India phenomenon emanating mostly from terrible liability – has pushed Indian agribusiness to a critical status. The National Sample Survey Organization ( NSSO ) Report released in 2005 provinces that 1 in 2 farm families are in debt and merely 10 per cent of the debt was incurred for non production intents. Besides. 32. 7 per cent of husbandmans still depend on money loaners. The National Crime Records Bureau reports that between 1997-2005 1. 56. 562 husbandmans committed self-destruction. About 60 of them took topographic point in the 4 progressive provinces. viz. . Maharashtra. Andhra Pradesh. Karnataka and Madhya Pradesh. More than 20 per cent of self-destructions have taken topographic point in Karnataka ( Pushap. 2007. Kumaraswamy. 2008 ) . 2. 0 Gross Capital Formation in Agriculture and Allied Sector The portion of agribusiness A ; allied sector in entire GCF after demoing a fringy addition during 1999-2000 to 2001-02 has been continuously worsening ( Table2 ) . It stood at 10. 2 per cent in 1999-2000. increased to 11. 7 per cent in 2001-02. The value of acquisitions of new or bing fixed assets by the Agriculture A ; allied sectors. which is known as Gross Capital Formation. as a proportion to the GDP in the Agriculture A ; allied sectors stagnated around 14 per cent during 2004-05 to 2006-07. Now. there is a pronounced betterment in this figure during the current Five Year Plan 2007-12. The proportion has increased to 16. 03 per cent in 2007-08 and farther to 19. 67 per cent in 2008-09 ( probationary ) and to 20. 30 per cent in 2009-10 ( speedy estimations [ QE ] ) . ( Table 2 ) Though. the GCF in agribusiness and allied sectors relative to overall GDP has remained dead at around 2. 5 to 3. 0 per cent. The diminuti on was chiefly attributed to worsen in the private sector despite addition in the portion of public sector. 3. 0 Trends in Indian Agriculture 3. 1 Production of Food Grains: In the earlier old ages of economic planning. nutrient handiness was the serious job in India. The entire nutrient grain production was barely 51 million tones in 1950-51. which increased to 198 million tones in 2004-05. The nutrient grain production though increased but at a really lower rate from 2004 to 2009-10 as compared to the rate of growing before Liberalization. ( Table 3 ) 3. 2 Trends in Croping Pattern: A alteration in cropping form indicates a displacement in country under the cultivation of major harvests. Since a long clip the country under nutrient grain harvest cultivation has been worsening. besides bespeaking that the cultivation of non-food grain harvests has been increasing. This displacement in cropping form was taking topographic point due remunerative monetary values being offered to commercial harvests and better market entree given to agriculturists. The tendency in cropping form is depicted in Table 2 ; and it is apparent that there is a considerable alterat ion in the cropping form after 2004-05 to 2010-11 in favor of commercial harvests. ( Table 4 ) . 4. 0 Indian Agriculture since WTO The constitution of World Trade organisation ( WTO ) in 1995 – to do the universe trade rule-based. transparent and free – had major deductions for India and its agribusiness. The Agreement on Agriculture ( AOA ) with its three wide countries viz. . market entree. export subsidies and domestic support was expected to better India’s agricultural trade under the new government of many-sided. transparent and nondiscriminatory trade. Although decrease in subsidies is a major characteristic under WTO. India had nil to fear as agricultural subsidy was less than 10 per cent. i. e. the ceiling. India could besides gain more net income by exporting agricultural green goods vis-a-vis the developed states ( holding 30-40 per cent subsidies ) as their cost of agricultural production would travel up when they cut down subsidies. Besides the subsidy decrease was non applicable to consumer subsidies. therefore maintaining the Public Distributio n System ( PDS ) and the weaker subdivisions of society unaffected. Further. the decrease in terminal charges on agricultural green goods would be advantageous for India because with the remotion of duties. her exports would hold favourable competitory environment. With increased competition the hapless people benefit from lower existent costs of family ingestion and production. what trade economic experts call the â€Å"procompetitive effects† of trade. Initially the reforms did ensue in betterment in footings of trade for agribusiness thanks to decontrol of fertilisers and a significant hiking in minimal support monetary values given by the authorities. Indian agribusiness witnessed a little acceleration in the growing rate. The state had successfully overcome the nutrient crisis. The growing rate in agribusiness and allied sectors ( at 1993-94 monetary values ) that had risen from 3. 3 per cent in 1951-61 to 3. 9 per cent in 1981-91 ( after a depression of 1. 7 per cent in 1971-81 ) . reached 5. 8 per cent in 1992-93. But the euphory was ephemeral. In 1993-94 it fell to 4. 1 per cent. rose to 5. 0 per cent in 1994-95 before falling to -0. 9 per cent in 1995-96 and -2. 4 per cent in 1997-98. In 2006-07 it was 2. 7 per cent and for the full period 2001-07 it was merely 2. 2 per cent ( RBI enchiridion. 2006 ) . Experts began to speak up that the international mantras being enforced by the developed states to liberate the clasps of poorness and battle of universe husbandmans including India. was traveling in the opposite way ( Pushap. 2007 ) . For India it was non merely a job of decelerating growing rate but a many-sided job with falling end products. employment. investing. exports etc. The one-year compound growing rate in rice for case showed a autumn in harvest country from 0. 63 per cent in 1981-91 to -1. 49 per cent in 2001-05 and its output rate from 2. 68 per cent to 1. 60 per cent during the same period. In instance of sugar cane the growing in harvest country fell from 3. 20 per cent to -4. 34 per cent and output rate from 1. 15 per cent to -1. 86 per cent. Although there was some country enlargement under non-food harvests as a whole. it was at the cost of shrinking of country under cereals ( RBI Handbook. 2006 ) . Investing in agribusiness as per centum of GDP was 1. 92 per cent in 1990-91. It fell to 1. 37 per cent in 1999. Although it rose to 2. 2 per cent in 2001-02 it began to fall and it reached 1. 7 per cent in 2004-05. 5. Policy Measures need to be done The crisis in agribusiness is a crisis of the state as a whole and so needs pressing attending. Some of the suggestions are listed here. A revamping of the agricultural recognition system – a pro-farmer attack is needed. Concerted agriculture with coordination. peculiarly by little and fringy husbandmans demands to be revitalized. There is a demand for periodic alteration of the procurance monetary values for farm green goods. doing those compensable. The issues sing Particular Economic Zones should be resolved at the earliest taking into history the echt involvements of the husbandmans. Our husbandmans must follow modern patterns of farming with a pinch of salt. non sailing on certificates of green revolution but implementing sustainable agribusiness. One can non merely sail on the certificates of green revolution. Sustainable agribusiness should be the nonsubjective. Eco-friendly techniques must be adopted. Authorization of husbandmans with societal. cultural and religious greening is required to avoid self-destructive instances. The balance between biological. human and physical capital growing must be maint ained. Decision Indian agricultural has been hit hard during station WTO period ( 1995 – 2003 ) . The portion of agro goods in India’s planetary export has declined during this period. During station WTO period. agricultural subsidies of developed states have been instead increased. Therefore it is really hard for India to confront planetary agricultural fight. In this scenario. the planetary agricultural trade would probably to go oligopolistic. The returns of assorted harvests have declined due to increase in cost of production. slow growing of agricultural productiveness. weak selling mechanism. addition in input strength and autumn of H2O tabular array. As a consequence husbandmans have become extremely indebted and are fall backing to self-destructions. In the close hereafter besides the entire quantum of exports peculiarly agribusiness and light fabricating goods can non be raised significantly in the planetary market in the close hereafter because of limited and unsure domestic export excess and peculiarly their inelastic demand at universe market. Mentions: Government of India ( 2004 ) â€Å"Agricultural Statisticss at a Glance 2007† . Ministry of Agriculture. New Delhi Gulati. Ashok. and Seema Bathla. â€Å"Capital Formation in Indian Agribusiness: Revisiting the Debate. † Economic and Political Weekly. May 19-25. 36:20. pp. 1697-1708. Hans. V. Basil ( 2008 ) . â€Å"Inclusive Strategies under Globalization – Challenges and Opportunities for India† . National Seminar on ‘Social Exclusion. Poverty and Livelihood of Marginalized Groups in India – Need for Effective Strategies’ . September 24-25. Centre for Study of Social Exclusion and Inclusive Policy ( CSEIP ) . Mangalore University. Mangalagangothri. Kumaraswamy. D. M. ( 2008 ) . â€Å"Agriculture in Karnataka† ( Keynote Address ) . State degree Seminar on Agriculture in Karnataka: Issues and Challenges. Sri Dhavala College. Moodbidri. Ministry of Finance â€Å"Economic Survey 2001-02† . New Delhi 2002. Pushap. P. ( 2007 ) . â€Å"Agriculture – India’s anchor Industry and its Plight in the aftermath of Globalization† . The Journal of World Intellectual Property Rights. 3 ( 1-2 ) : 159-183 Reserve Bank of India ( 2006 ) . â€Å"Hand Book on Indian Statistics† . Dept of Economic Policy and Research. Mumbai. Sahu. G. B. . and Rajshekar. D. ( 2005 ) . â€Å"Banking Sector Reform and Credit Flow to Indian Agricultur† . Economic and Political Weekly. vol. XL 53. Pp 5550-555 Sahu. Gagan. Bihari ( 2008 ) . â€Å"Supply Analysis of Institutional Credit to Agriculture for Major States in India† . Asiatic Economic Review. 50 ( 2 ) : 325-340. Table 1 India’s Growth Performance ( Percent per twelvemonth ) India’s Growth Performance Total GDP Growth Year Agriculture Sectoral Growth of GDP Industry Services